Share this postEmerging Market SkepticBrazil Small Cap ETF Stock Picks (January 2025)Copy linkFacebookEmailNotesMoreEM Fund Stock PicksBrazil Small Cap ETF Stock Picks (January 2025)Brazil stock picks that are the holdings of the iShares MSCI Brazil Small Cap ETF (NASDAQ: EWZS) and/or VanEck Brazil Small-Cap ETF (NYSEARCA: BRF) as of late January 2025.Jan 30, 2025∙ PaidShare this postEmerging Market SkepticBrazil Small Cap ETF Stock Picks (January 2025)Copy linkFacebookEmailNotesMore1Share

This post updates our 2023 post (Brazil Small Cap ETF Stock Picks (September 2023)) by taking another closer look at all 128+ stock pick holdings (as of January 27, 2025 - plus stocks from our 2023 post that may no longer be holdings) for the following Brazil ETFs:

• iShares MSCI Brazil Small Cap ETF (NASDAQ: EWZS)

  • P/E: 9.92 / Yield: 4.87% (Yahoo! Finance)

• VanEck Brazil Small-Cap ETF (NYSEARCA: BRF)

  • P/E: 9.23 / Yield: 4.05% (Yahoo! Finance)

Both of these Brazil ETFs are focused on smaller cap Brazilian stocks in a diverse range of sectors that have most of their exposure to the country, are in more traditional or “old economy” type industries-sectors (agriculture, utilities, manufacturing, real estate, etc.) rather than tech and have less exposure to global cyclicals e.g. MNC mining behemoth Vale (NYSE: VALE), etc.

When updating our North & Latin America Stock Index, I also noticed a surprising amount of corporate activity (e.g. name/ticker changes, M&A, stocks delisted and taken private, etc.) since 2023 involving Brazilian stocks which is further reflected in this updated post. In addition, a few Brazilian-Latin American stocks covered in this updated post have also delisted from the NYSE in an effort to lower regulatory reporting costs/complexity, to focus more on the local market/local investors, and/or to align with parent-company strategies over maintaining U.S. listings.

Here is a look at the more recent performance of both Brazil small cap ETFs covering the COVID period (the charts are linked back to Yahoo! Finance):

And the long term performance chart for both:

We also have a list of Brazil ADRs here and here is a screenshot of the list of Brazil ETFs from our website:

And here are the ETF charts when we add the two non-leveraged and non-small cap Brazil ETFs:

As a reminder: Our September 5th 2023 post covered a podcast interview with an investor who understands Portuguese who made some interesting observations about Brazil. He questioned putting money into the country because if you speak Portuguese and watch the local news, “you would definitely not want to watch it…” Given the last narrow (and I would add rather questionable…) election results and how much money is spent on Brazilian politics, he said that Lula has been unable to do anything constructive - except appoint old cronies into positions where they can profit from…

A second reminder: Lula’s last Presidency gave us Operation Car Wash (Wikipedia…) or Operação Lava Jato (the Brazilian investigation site which appears to no longer be functioning…) - the investigation of which ensnared many corporations around Latin America.

In addition, the investor said in the interview that the Brazilian government was having trouble funding the next year’s budget and was looking for money from everywhere and everybody - something that did not sound good for sovereign bond investors as well as for Brazilian companies who might find themselves in the crosshairs of government efforts to raise funds to fund itself.

A third reminder: Charles de Gaulle once observed:

"Brazil is the country of the future... and always will be…"

(It’s not clear whether or not de Gaulle had also once said: "Brazil is not a serious country...")

With that said, here is a quick look at some updated key Brazil economic data:

Brazilian RealBrazilian RealBrazil Inflation RateBrazil Inflation RateBrazil Interest RateBrazil Interest Rate

More such economic charts are available when searching for Brazil on Trading Economics…

Getting back to Brazilian stocks, note the following listing requirements for the Novo Mercado (New Market) listing segment of the B3 for the trading of shares issued by Brazilian stocks that commit themselves voluntarily to adopt corporate governance practices in addition to those that are required by law:

6.2 Financial Statements Translated into English. After the end of each fiscal year and of each quarter, the Company shall disclose, in the English language, all the consolidated or individual financial statements (if consolidated financial statements are not prepared), in conjunction with the management report, or comments on the performance of the Company and the opinion or report of special review of the independent auditors, according to the Brazilian law.

6.2.1 The disclosure of financial statements translated into English contemplated in subsection 6.2 must occur as of the release of the first periodic financial information (whether annual or quarterly) prepared after the securities issued by the Company begin to trade on the Novo Mercado.

6.2.2 The release of financial statements translated into English contemplated in subsection 6.2 must take place at the latest within fifteen (15) days after the Portuguese language financial statements is released, giving due regard to the timeframes prescribed by applicable law.

In addition, note that most of the English language Investor Relations sites for many of the Brazilian stocks in this post tend follow a similar pattern like this:

Aeris Industria E Comercio De Equipamen (English) IR Page

All of this makes Brazilian stocks (at least those trading on the Novo Mercado segment) much easier to research than many Asian and especially Chinese and Korean stocks (in particular…).

In addition, it should be noted that Brazilian companies frequently issue preference shares or preferred stock (ações preferenciais — PN) alongside ordinary shares (ações ordinárias — ON) due to a combination of legal (Brazilian law requires companies to distribute a minimum of 25% of net profits as dividends), tax (Brazil dividends are tax-exempt for shareholders), historical (during Brazil’s 1990s privatization wave, the government often issued non-voting preferred shares to attract foreign capital while retaining some control), cultural (Brazilian retail investors like dividends), and market-driven factors unique to Brazil. Many Brazilian companies are also family-owned or tightly controlled by founding groups - meaning issuing non-voting preference shares to raise capital helps them to retain control.

To make your life easier, this post includes:

[Note: On desktop browsers, an autogenerated table of contents will appear on the left side linked to each stock with the full TofC viewable for paid subscribers…]

• Which ETF has or had (2023) the stock as a holding.